Seth Klarman’s Investment Framework

Margin of safety and risk aversion is Seth Klarman's central investment tenet. And risk aversion begins with defining a margin of safety for your investments. In his book Margin of Safety, Klarman outlines three of the best ways to build a winning stock portfolio:

· Consider the risk and downside associated with the investment before focusing on potential returns.

· Perform a bottom-up approach on individual companies while ignoring the industry and its connections with the economic cycle as a whole.

· Evaluate how the company achieves its returns and research why revenues and profits have increased or decreased year by year.

The key to downside risk protection

In the current financial market environment, unprecedented things are happening with surprising regularity. This is as true for our preparations for financial disaster as for any other kind. And when the memories of disaster, along with worry and diligence, dim over time, it leads to complacency in investors. Complacent investors naturally focus more on benefits and the focus on benefits will lessen the concern over what could go wrong. It is important to prepare your investments for stormy times and one way to do this is to consider the downside protection an investment offers. Downside protection starts with understanding the risks associated with the investment. When the risks are identified, then the best course of action is developing a plan for protecting against those downsides. One of the most popular forms of downside protection is investing with a margin of safety.

As Klarman writes in Margin of Safety, "A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world." Klarman, when giving a margin of safety, drives towards investments that provide adequate balance sheet cash and low-risk collateral. A margin of safety! doesn't guarantee an investment will generate high returns but it provides room for error in an investor's judgment. In particular, it provides a cushion against any miscalculations that may occur. Miscalculations, no doubt, will be inevitable because an investment's intrinsic value is subject to various interpretations by investors, which affect how large a margin of safety investors will choose to set. In general, the bigger the margin of safety set by investors, the less likely investors will suffer losses.

Why use bottom-up approach

Bottom-up investing focuses more on analyzing a specific company and less on the the financial markets and economy as a whole. With bottom-up investing, a thorough review of the company is done, paying close attention to factors like financial stability and the conduct of management. This approach is commonly used during instances where we think that individual companies can do well in an industry that is not performing well. They pose great opportunities for value investors because these types of companies are ones most likely to be overlooked by the average investor.

Most investors naturally choose top-down investing, a strategy focused on investing according to the market cycles and economic environment, which tends to be a better measure of how the stock market is performing as a whole. However, economies and industries are often too complex for investors to gain useful insight.

Bottom-up investors ignore the markets and focus on specific dynamics to get ahead of the game. They evaluate factors like competitive advantage and management reputation.

Klarman said the following to investors in his Baupost letter earlier this year: "Our disciplined risk aversion throughout 2011 enabled us to avoid dangerous temptations and remain focused on investments in our areas of strength and competitive advantage." Competitive advantage comes down to two questions. Can the company raise prices for their products while maintaini! ng sales ! in a competitive environment? Can it continue to retain customers as the business undergoes operational and technological changes? One aspect for investors to keep in mind is that of technological change, a constant threat to industries like retail stores and mobile communications. Best Buy (BBY) used to be the go-to place where customers could shop for electronic appliances but internet retail took that away. RIM (RIMM) used to be a model company that produced phones for email on-the-go but competitors like Apple (AAPL) and Google (GOOG) upped the ante and took away the value of RIM's products. These kinds of circumstances show that keeping up with trends on a regular basis is a vital part of bottom-up investing.

Management reputation explains a company's business model, a measure of how the business makes a profit while delivering value to its stakeholders. If there is one theme that continually runs through the public statements of billionaire investor Warren Buffett, it is the principle that investors should only consider investing in companies with managers of competence and integrity. Buffett explains that he likes managers who stick to doing what the company does best. He declares, "The best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago." On the contrary, Buffett suggests investors to avoid companies with managers who pursue growth for growth's sake and acquisitions for the sake of owning more. Like Buffett, Klarman is a deep value investor who thinks more bottom-up than top-down.

Develop a framework for decision making

Outstanding investment returns are, indeed, hard to achieve. But once investors take care of the risks and understand a company better, it is possible to develop a strategy for generating better returns. Investors can increase their chances at bigger returns by gaining an idea on how much cash a business is generating, where it is coming from, and ! whether i! ts origin is sustainable. According to Klarman, a company's share price often fluctuates significantly in the absence of fundamental developments, such as when a sizeable seller needs cash quickly. So how can investors determine the sustainability of cash within the business? Reading through the financial statements, focusing on the line items that affect cash generation, and trying to remember key statistical numbers are just a few of the key steps.

When investors find the information they need, they need to dig deeper into those numbers by examining sub-statements and reports that say something about the numbers. These steps, taken altogether, will form the foundation of a unique investing strategy for each value investor. Over time, Klarman discovered a great strategy that produced a top-of-the-line stock portfolio.

Four of Klarman's stocks include PDLBioPharma (PDLI), Ituran Location and Control (ITRN), BP (BP), and Microsoft (MSFT). What these companies have in common are annually increasing total revenues, annually increasing cash flows, and gradually decreasing operating expenses and debt. Additionally, they show a clear value focus with P/E ratios no greater than 15. And even when stocks like these go through a troubling period brought on by a sagging economy or major scandal, they have an ability to bounce back.

The following sums up what Klarman tries to do at Baupost: "We are always long-term oriented. We never attempt to gauge near-term market movements; we have no edge there. We strive to make long-term investments that have truly compelling risk-reward characteristics. We are never afraid to stand apart from the crowd. We stick to our game plan, and focus on areas where we are skilled and experienced."

An investment framework like Klarman's is necessary to develop a winning portfolio. The framework should include principles through which ideas and decisions are filtered. A sound investment process, most of the time will lead to a good investm! ent resul! t. But ultimately, investor success in the long term is shaped by how well we can develop and utilize our skills over time to understand companies better.

10 Best Gold Stocks To Own For 2014

It seems that once you've grown large enough to disrupt business as usual for MasterCard (NYSE: MA  ) and Visa (NYSE: V  ) , you run the risk of getting muscled. MasterCard recently announced plans to raise prices on intermediated payment processors (read: digital wallets) that chose to withhold valuable transaction details from MasterCard. In other words, this measure takes direct aim at eBay's (NASDAQ: EBAY  ) PayPal and other digital wallets such as Google Wallet that do not share transaction details with the payment processor.

Priceless data
The more transactional data a company can get its hands on, the more insight it has on consumer behavior. In an age where marketers are working to better connect the advertising world with the world of commerce, transactional data becomes the equivalent of marketing gold. Considering that PayPal conducted nearly $145 billion in transactions last year, it's not surprising to learn that MasterCard's fee could impact eBay's bottom line in the neighborhood of $0.03-$0.04 per share for the year. Should Visa follow suit, eBay investors can expect its earnings to be affected by another $0.07-$0.08 for the year.

10 Best Gold Stocks To Own For 2014: CME Group Inc.(CME)

CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.

10 Best Gold Stocks To Own For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Top China Companies To Invest In 2014: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:

• [By Mel Daris]

  AngloGold Ashanti (AU), a South African company, is trading for $33 and pays a dividend which yields 3.20%. The stock has an astonishing P/E of 1,015. Its net income totaled $112 million last year, but negative cash flows of $620 million. It holds net tangible assets of $4.3 billion and its balance sheet has not grown nearly as quickly as the other companies on this list. AngloGold has two new mines coming online in Congo and Colombia.

10 Best Gold Stocks To Own For 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Advisors' Opinion:

• [By Curtis]

  Golden Star Resources, Ltd Com (AMEX:GSS): This equity had 10,766,183 shares sold short as of Aug 31st, as compared to 9,400,663 on Aug 15th, which represents a change of 1,365,520 shares, or 14.5%. Days to cover for this company is 3 and average daily trading volume is 3,419,976. About the equity: Golden Star Resources Ltd. is a mid-tier gold mining company. The Company’s operating mines are situated along the Ashanti Gold Belt in Ghana, West Africa.

10 Best Gold Stocks To Own For 2014: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Smith]

  Although its name does little to denote this, Goldcorp is a well-positioned silver play for 2011, according to the analysts we surveyed.

  “The name is one that people tend to think of it as gold, but it's in the top 20 of silver producers globally with about 13 million ounces a year ,” says Peter Sorrentino of Huntington Funds.

  Morningstar analyst Min Tang-Varner recently raised her fair value estimate for Goldcorp by $12 a share to $48 after the company reported a 28 per cent rise in revenue for the third quarter ended Sept. 30 compared with the year before.

  This, despite 4 per cent decline gold production, as revenue received a boost from $1,239/oz realized gold prices and $19.15/oz silver prices.

  Tang-Varner tells investors that the reduction of Goldcorp's cash cost by $100/oz from the prior quarter to $260/oz due to higher silver, copper and zinc production and the run-up in their prices, was “rather extraordinary.”

  Sorrentino says Goldcorp is a stock that investors would be “wise to consider” if they were looking for a name that would be discovered suddenly as a major silver play, without feeling that they were overpaying for it.

  Goldcorp also prices everything that it does in Canadian dollars, which should reduce currency risks for investors in Canada.

• [By Christopher Barker]

  Every ship needs an anchor, and for gold investors looking to navigate the admittedly rough seas of the gold mining industry, I can think of no greater anchor than Goldcorp. With the important caveat that some of the company's substantial challenges faced during 2012 could present further selling pressure in early 2013 as forward production guidance takes a bit of a haircut, I agree with Credit Suisse analyst Anita Soni that any such weakness may present a meaningful buying opportunity. I won't go into great detail here, since investors can access my premium research report on Goldcorp for further discussion of the substantial long-term investment opportunity in the shares of this quality producer.

10 Best Gold Stocks To Own For 2014: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Vatalyst]

  With headquarters in Canada, Agnico-Eagle is a gold producer that has been around for a while with operations in Canada, Finland and Mexico and the United States that has paid a cash dividend for 29 consecutive years. AEM gained 25% over the year and reported 83.5% growth in quarterly earnings. It has a market capitalization of $11.4 billion and a trailing P/E ratio of 34x with expectations of earning $0.55 per share. AEM, like other operators like it, are likely a better bet than ETF trust options like SPDR Gold Shares (GLD).

10 Best Gold Stocks To Own For 2014: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  I've been reminding Fools to consider positioning for Northgate Minerals' golden explosion for months, and patient gold investors continue to await the day when Northgate's powerful prospects are more fully reflected in the shares. Construction of the critical Young-Davidson mine continues right on schedule, and first production now stands about two quarters away. That means Northgate is reasonably likely to achieve its 2012 production target of 300,000 ounces, followed by 350,000 ounces in 2013. Meanwhile, Northgate recently drilled "one of the best holes ever intersected on the property" -- featuring 4.31 grams of gold per ton over a very wide 79.6-meter segment -- from a new discovery zone outside of the existing 2.8 million-ounce reserve.

  If Young-Davidson were Northgate's sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill program at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.

10 Best Gold Stocks To Own For 2014: NEW GOLD INC.(NGD)

New Gold Inc. engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The company primarily explore for gold, silver, and copper deposits. Its operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. The company also has development projects, including the New Afton gold, silver, and copper project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  This stock has set the gold standard for share price appreciation among gold miners, advancing more than 140% since I introduced Fools to the new face of New Gold back in January 2010. Looking out over the long-term horizon, New Gold has constructed a gorgeous development pipeline to complement its trio of producing gold mines, featuring: a low-risk 30% stake in Goldcorp's El Morro project in Chile, the New Afton copper and gold project in British Columbia (with production scheduled to begin mid-2012), and the recently acquired Blackwater project north of New Afton.

  Although I expect the Blackwater deposit to expand considerably with further exploration, the project's initial indicated gold resource of 1.8 million ounces already leaves New Gold in command of 14.7 million ounces of measured and indicated gold resource. Tossing in copious supplies of by-product metals -- most notably 83.5 million ounces of silver and 3.5 billion pounds of copper -- New Gold is positioned to enjoy consistently low production costs throughout its sustained growth trajectory.

10 Best Gold Stocks To Own For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

10 Best Gold Stocks To Own For 2014: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

Advisors' Opinion:

• [By Christopher Barker]

  My recent survey of bargain-basement stock valuations among gold miners identified Thompson Creek Metals as a glaring opportunity for value investors. The miner sports two world-class molybdenum mines with 534 million pounds of reserves between them, along with an array of attractive development projects in the pipeline. Foremost among those is the Mt. Milligan copper and gold project, where Thompson Creek expects to launch itself into the ranks of intermediate gold producers with production commencing in late 2013.

  With 6 million ounces of gold reserves, accompanied by 2.1 billion pounds of copper, Mt. Milligan will deliver about 262,100 ounces of gold per year for the first six years of a 22-year mine life, averaging 194,500 ounces annually over that entire span. Although 25% of that gold production is already spoken for through a gold stream agreement with Royal Gold (Nasdaq: RGLD  ) , Thompson Creek Metals is sure to enjoy a powerful cash-flow explosion.

Darden: A Step Ahead in Latin America - Analyst Blog

Multi-concept, full-service restaurant operator Darden Restaurants Inc. (DRI) recently announced that it has inked area development deals with two renowned Latin American restaurant operators, Grupo Piramide and Dosil S.A. to establish its presence in six Latin American countries − Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica and Peru.

While Grupo Piramide will tap the first five regions and develop Darden's three key brands -- Red Lobster, Olive Garden and LongHorn Steakhouse -- in these countries, Dosil S.A. will concentrate only on Peru. The terms of the deal were not disclosed.

Both these development partners are sought-after multi-brand restaurant operators with a presence in South and Central America and the Caribbean. While Grupo manages the operations of other American brands like Wendy's Co. (WEN), Yum! Brands Inc.'s (YUM) KFC and Pizza Hut, Peru's leading operator Dosil SA has taken charge of restaurant behemoths like Burger King Worldwide (BKW) and Brinker International's Chilli's. Given their familiarity with local food habits and a strong presence in the same industry, we believe, both the parties remain strategic fits for Darden's expansion plan.

Darden has been eyeing the Latin American markets for a long time. The latest deal will expand Darden's presence in 12 markets throughout Latin America. In late February, this Orlando-based restaurateur signed a deal with International Meal Company (IMC) to enter four Latin American countries − Brazil, Colombia, the Dominican Republic and Panama.

Prior to this, in Jan 2013, Darden expanded its partnership agreement with Restaurant Operators to open its Red Lobster brand of restaurants in Puerto Rico. Notably, last year, this Zacks Rank #3 (Hold) company joined forces with a Mexican casual dining company, CMR, to enter the Mexican market. These above mentioned deals affirm management's intent to make Latin America one of the prime markets for Darden's international expansion. Darde! n sees tremendous growth potential in this market where it finds takers for American dining brands.

Further, the region's middle-income population is also increasing, which could materially benefit the country's food and beverage market. The company seeks to capitalize on this opportunity. We believe that the company is trying to expand beyond the U.S. in the midst of cut-throat competition in the rather saturated domestic casual dining market.

ICE Clears SEC Regulatory Approval for NYSE Euronext Deal

U.S. securities regulators approved IntercontinentalExchange Inc. (ICE)'s acquisition of NYSE Euronext (NYX), bringing the company one step closer to taking over some of the biggest stock and derivatives exchanges in America and Europe.

The companies still require approval from individual country regulators in Europe. IntercontinentalExchange agreed on Dec. 20 to acquire NYSE Euronext for cash and stock totaling $8.2 billion at the time. The Securities and Exchange Commission said in a filing yesterday it approved a rule change required to complete the deal.

IntercontinentalExchange, the energy and commodity futures bourse known as ICE, is buying the U.S. equity exchange operator as the profitability of stock trading declines and derivatives generate more income. European Union regulators approved the deal on June 24 after blocking Deutsche Boerse AG (DB1)'s purchase of NYSE last year, citing concern over competition in derivatives and clearing.

"It's positive for the NYSE because they clearly needed a partner," Ben Schwartz, the Chicago-based chief market strategist at broker Lightspeed Financial Inc., said by phone. "The SEC and the European regulators are doing the right thing by allowing this merger. It'll be good for the marketplace."

NYSE shares rose 0.4 percent to $42.03 at 10:50 a.m. New York time. They have gained 33 percent this year, twice the advance in the Bloomberg World Exchanges Index of 27 bourses. IntercontinentalExchange added 0.5 percent to $181.23, extending its 2013 advance to 46 percent.

NYSE, ICE

Rich Adamonis, a spokesman for NYSE Euronext, and Kelly Loeffler, a spokeswoman for IntercontinentalExchange, said the SEC decision was welcome.

IntercontinentalExchange, which bought the New York Board of Trade in 2007 and renamed it ICE Futures U.S., has said it will keep the NYSE Euronext brand. The merged company will maintain dual headquarters in Atlanta and New York.

IntercontinentalExchange Chief Executive Officer Jeffrey Sprecher said Aug. 6 that the exchanges expect the deal "will be finalized this fall." Shareholders of both companies approved the transaction in June.

Merging NYSE Euronext, which owns the biggest exchanges by value of listings in the U.S., France and the Netherlands, with the second-largest futures market underscores both the growing importance of derivatives and the diminishing influence of the New York Stock Exchange, founded more than two centuries ago under a buttonwood tree in New York. ICE plans to spin off Euronext, the Continental European equity markets of NYSE.

Populist outcry, antitrust concern and some of the most volatile markets on record have prevented the completion of more than $32 billion in announced exchange transactions, according to data compiled by Bloomberg on deals since October 2010 that were valued at $1 billion or more.

Top Portfolio Products: Schwab Lowers Expense Ratios, Donoghue Adds Dividend-Yield Offering

New products introduced over the last week include the availability of W.E. Donoghue’s Power Dividend Index Portfolio through Envestnet’s SMA platform and Sharia-compliant portfolios from Accretive Wealth Management.

In addition, Wisdom Tree announced the listing of 12 additional ETFs on the Mexican stock exchange, and RiverPark Funds is closing it’s a short-term high-yield fund to new investors.

Here are the latest developments of interest to advisors:

1) Charles Schwab Lowers Expenses on Two Index Funds

Schwab (SCHW) says it reduced the operating expense ratios (or OERs) for two of its fundamental index mutual funds on Thursday–-the Schwab Fundamental International Small Company Index Fund (SFILX) and the Schwab Fundamental Emerging Markets Large Company Index Fund (SFILX), which now have OERs of 0.49% and 0.50%, respectively.

Previously, the global small-company fund had an expense ratio of 0.55%, while the emerging-markets large-company fund’s expense ratio was 0.61%.

2) W. E. Donoghue Portfolio Available through Envestnet

W. E. Donoghue & Co., Inc. recently announced that its Power Dividend Index Portfolio is now available through Envestnet's SMA platform.

The portfolio tracks W.E. Donoghue’s Power Dividend Index, which is calculated by Standard and Poor’s Custom Indexes. It isolates the top five dividend yielding stocks from each of the 10 GIC sectors in the SPX 500, equally weights those 50 stocks, rebalances quarterly and provides Donoghue's tactical overlay for defense.

3) Accretive Wealth Management Announces Sharia-Compliant Portfolios

Accretive Wealth Management, LLC, announced a strategic partnership with Aperio Group that enables it to offer separately managed Sharia-compliant portfolios.

Patrick Geddes, Aperio’s chief investment officer, said, “The separately managed account (SMA) structure also allows taxable investors the opportunity to harvest tax losses that can be used to offset gains elsewhere in the portfolio, improving their overall after-tax return.”

Companies included in the Islamic Values portfolio must first pass exclusionary screens to ensure they do not derive 5% or more of their cumulative revenue from the following products, services and activities: alcohol, tobacco, pork-related products, financial services, defense/weapons, gambling/casino, music, hotels, cinema, and adult entertainment.

The next screen eliminates companies that derive significant income from interest or that have excessive leverage. For clients who are very risk-averse, additional quality and volatility screens can be added.

SIFMA Pushes for Higher Muni Trading Standard

The Securities Industry and Financial Markets Association on Friday shared details on its proposed execution-with-diligence standard for municipal trading.

The proposal follows the industry group’s initial proposal to the self-regulatory organization Municipal Securities Rulemaking Board (MSRB) in June 2013 that an execution-with-diligence standard be applied to trades in municipal securities, which is a higher standard for dealers to meet than what is currently in place, according to SIFMA.

A working group of SIFMA members developed the standard following the release of the 165-page July 2012 SEC Report on the Municipal Securities Market. The industry group says an “overwhelming majority of members of SIFMA’s Municipal Securities Division” approved it.  

“SIFMA’s proposal moves the industry forward in a robust way that further enhances standards so that customers receive fair and reasonable prices,” said David Cohen, managing director and associate general counsel of the industry group, in a statement. “The proposal recognizes the unique characteristics of the municipal market and would strengthen regulation in a manner consistent with the way the market operates.”

Because muni bonds are not traded on a central exchange and do not have a central aggregator of quotes, the execution standard in the municipal market “cannot mirror that for equities,” SIFMA says. “The municipal securities market also has fundamental differences from other debt markets, including its diverse and fragmented nature, small securities trade sizes and far less frequent trading than corporate bonds."

In general, SIFMA says that it supports efforts that would improve trade-execution standards. Since there is not one path for dealers to take for execution with diligence, the industry group says, its members have proposed a principles-based rule. 

The SIFMA proposal resembles the approach taken by the Financial Industry Regulatory Authority, an independent regulatory body, to corporate fixed-income securities. It seeks to define the muni bond market as one that includes brokers, dealers and municipal securities dealers known to trade particular securities, and it would require periodic review of trading counterparties, a new regulatory requirement.

For the proposal, SIFMA says it is encouraging the MSRB to amend its Rule G-18 to reflect an “execution-with-diligence” concept of execution.  The industry group also is asking the MSRB to consider “the short-term and long-term costs and potential benefit of any rulemaking before formally proposing any changes.”

According to the MSRB’s website, its board of directors  met this Wednesday through Friday to discuss the proposed consolidation of Rules G-18 and G-30 to create one new rule on fair pricing and other issues.

At the meeting, the MSRB board says it agreed to take "a two-step approach" to clarifying, and potentially expanding, the fair pricing obligations of dealers.

"First, it agreed to consolidate into a new rule municipal securities dealers’ obligations related to fair pricing outlined in a number of existing rules and interpretations," the organization explained in a press release issued Friday. Also, the board will seek public comment "on condensing relevant requirements described in MSRB Rule G-30 on fair pricing, MSRB Rule G-18 on agency transactions and interpretations to MSRB Rule G-17 on fair dealing."

The groups adds that it is going to publish "a concept release on the merits of requiring municipal securities dealers to take specific steps to obtain the best price for investors buying and selling municipal securities."

In addition, the MSRB plans to seek public comment "on whether such a standard is necessary for the municipal market, the benefits that would be attained, as well as on the costs of establishing a more structured approach for documenting how dealers satisfy their existing obligation to obtain a fair price for investors."

“Although there appears to be growing acceptance to applying certain best execution-like principles to our market, the Board looks forward to gathering broad public input in order to be as fully informed as possible before making any specific recommendations,” MSRB Chair Jay Goldstone said in a statement.

Last month, the MSRB warned investors to be aware of the terms of certain types of direct-pay municipal bonds to better understand if they are affected by the federal budget sequestration. It also alerted broker-dealers and municipal securities dealers of their customer protection obligations under MSRB rules in connection with customer transactions relating to direct-pay bonds.

 

Southwest Gains Traffic in June - Analyst Blog

Dallas, Texas-based Southwest Airlines Co. (LUV) witnessed improvements in traffic and capacity in Jun 2013, supported by perked up activities across the network.

The company's traffic – measured in revenue passenger miles (RPMs) – was 9.85 billion for the reported month, up 2.3% from 9.62 billion recorded a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) moved up 1.7% to 11.59 billion. The load factor or percentage of seats filled by passengers improved marginally to 85.0% from 84.4% in Jun 2012.

For the first half of this year, Southwest generated RPMs of 51.69 billion (up 1.6% year over year) and ASMs of 65.03 billion (up 1.8% year over year). Load factor was 79.5%, reflecting a decline of 20 basis points.

We find Southwest focused on a number of initiatives to increase revenues and reduce costs over the next couple of quarters. These include the customer-friendly programs, profitable collaborations and network optimization.

The company is also adding novel features to its services as well as introducing new products, which are enhancing its value and profitability. Recently, Southwest entered into a deal with Dish Network Corp. (DISH) to provide the flyers of the airline free live television service on their own Internet devices including phones, tablets or laptops.

The U.S. low-cost carrier will report its second quarter 2013 financial results on Jul 25, 2013, before the opening bell. The Zacks Consensus Estimate for earnings currently stands at 39 cents per share for the quarter. The estimate reflects a year-over-year growth of 7.9%.

Southwest – which operates along with other prominent players such as United Continental Holdings (UAL) and JetBlue Airways (JBLU) – currently holds a Zacks Rank #3, implying a Hold rating.

Daily ETF Roundup: Stocks Finish Flat, XLK Tumbles On ...

Top 10 Growth Companies To Buy For 2014

U.S. equities ended essentially unchanged in Friday's lackluster trading session, as investors weighed a batch of underwhelming tech earnings reports. Tech-giants Google (GOOG) and Microsoft (MSFT) posted dismal quarterly results after the closing bell on Thursday, with earnings and revenues coming in well bellow analyst expectations. General Electric (GE) and Honeywell (HON), however, managed to post encouraging second quarter results .



Global Market Overview: Stocks Finish Flat, XLK Tumbles On Microsoft And Google EarningsFollowing today's disappointing tech earnings reports, only one major U.S. equity indexes managed to close in positive territory. The S&P 500 ETF traded 0.18% higher, after its underlying index closed at a fresh record high of 1,692.09. The Dow Jones Industrial Average ETF slipped 0.01 %, while the tech-heavy Nasdaq ETF tumbled 1.03%.

In Europe, markets were little changed; the Stoxx Europe 600 added less than 0.1%. Meanwhile, China's Shanghai Composite shed 1.5%, and Japan's Nikkei Stock Average slumped 1.5%, snapping a five-session win streak, as investors remained cautious ahead of upper-house elections over the weekend.

Bond ETF Roundup

U.S. Treasuries rose today as investors turned their attention back to this week's dovish Fed news. Yields on 10-year notes fell 4 basis points, while 30-year bonds and 5-year note yields fell 5 and 3 basis points, respectively .

Commodity Roundup

Crude oil futures finished flat today, settling just above $108 a barrel, as investors weighed an improved outlook for energy demand against falling U.S. crude supplies. In other energy trading, gasoline futures traded slightly higher while natural gas shed 2 cents. Meanwhile, gold futures traded higher, settling at $1,293.30 an ounce.

ETF Chart Of The Day #1: The Technology Select Sector! SPDR ETF was one of the worst performers today, shedding 1.69% during the session. After  Google (GOOG) and Microsoft (MSFT) missed earnings and revenue forecasts, this ETF gapped significantly lower at the open. XLK eventually settled at $31.45 a share .

Click To Enlarge

ETF Fun Fact Of The DayThe best-performing themed strategy over the trailing 1-week period has been the Risk On ETFdb Portfolio, which has gained 2.21%.



Disclosure: No positions at time of writing.

Gold outlook for short-term: thegoldforecast.com

After the storm passed, precious markets Wednesday revived in New York, with gold up USD 11.20 through afternoon trading, with silver up 50 cents, or 1.6%.

Pent up demand driven by bargain hunters and short covering investors sent gold, silver and the other precious metals up Wednesday, despite trading that is still on the thin side because of the storm's effects.

There was also some good news for gold insofar as the EU and Greece seem to be finally moving toward a resolution of that small country's financial difficulties. That would mean a strengthening of the euro, generating a negative pressure on the dollar, and therefore positive for gold.

German Finance Minister Wolfgang Schaeuble stated that "there was considerable progress" among the Euro zone members toward reaching a conclusion of reforms that Athens must implement to receive new emergency loans, Reuters observed. "The decisive phase for Greece has started," believes Carsten Bzerski, a Brussels-based senior economist at ING Group.

Elsewhere in Europe, Germany's retail sales scooted up 1.5% in September, also boosting the euro. If Greece follows through, it is more likely Spain can resolve its problems.

The prospect of an unforeseen stimulus effect due to the ravages of Hurricane Sandy helped to push gold higher, too. The USD 25 to USD 30 billion (thus far) in property damage will have to be addressed, and though some of the re-building money will come from private insurers, much of the financing will come through federal and state borrowing. (What else?)

Expect the next few days to remain sluggish ahead of US employment figures on Friday and because of the waiting game we are all playing regarding the upcoming US elections and change of leadership in China.

However, from our vantage point, the lynchpin for gold, and all matters economic, appears to be Europe.

Investing Sabermetrics: A Formula for Financials and Holding Companies

Top Gold Stocks To Invest In Right Now

"There's a way to do it better — find it." — Thomas Edison

Open any Berkshire Hathaway (BRK.A)(BRK.B) annual letter and the first thing you see will be a listing of the yearly gains in the book value per share of BRK.A from 1965 to the present year. At the bottom of the year-by-year synopsis lies the compounded annual growth rate (CAGR) of those gains in equity. Later in the article I will show the mathematical formula for calculating those compound gains.

Buffett believes that gains in book value per share are a better reflection of the growth in value of BRK.A as opposed to gains in the price per share of the company. Buffett uses book value as opposed to price per share since he feels that the market does not always assign a fair valuation to his company. He then compares changes in the equity of BRK.A to changes in the value of the S&P index while adding back in dividends.

This is Buffett's acid test for evaluating his efficiency in allocating capital at Berkshire Hathaway. After all, if the gains in the equity of his company were not significantly superior to gains in the S&P plus the dividends which they accrue, why would any sane individual choose to invest in BRK.A instead of an S&P index fund?

Rest assured that Buffett has passed the acid test with flying colors. Since 1965 Berkshire's book value has compounded at an annual rate of 19.8%, while the S&P with dividends included has compounded at an annual rate of only 9.2%. That means that Buffett has outperformed the S&P at a compounded rate of 10.6% since the inception of the current Berkshire Hathaway holding company in 1965. That translates into a gain in excess of 500,000% for the original stockholders. Alas, if only I had invested a double sawbuck of my grade school allowance in 1965.

All that said, today's article is not about singing the praises of "The Oracle.! " Rather, it is about introducing a better investing sabermetric in evaluating the efficiency of the management of a company. For reasons which I discuss later, today's analysis is best suited for evaluating financial stocks and holding companies.

The thesis of today's article is that investors should focus on businesses which have a 10-year annual compounded growth rate of book value per share in excess of 15 percent. Further, investors should only purchase these companies when they are trading at a 25 percent discount to their 10-year cyclically- adjusted price to book value ratio.

The idea is simple: Buy stocks with high quality management when they are inexpensive in relative terms.

Incidentally, GuruFocus has all the information you need to access this information — and you thought you knew everything about GuruFocus. More on that later.

Book Value as the Key Metric for Financial Stocks and Holding Companies

Traditional earnings multiples do not supply investors with relevant evaluation tools in the case of many financial stocks or holding companies. When looking at holding companies the reason is clear. Take the example of BRK.A: The only earnings which are derived from their extensive investment portfolio are the dividends or interest payments they receive from the various securities.

The reason is not so clear to investors when evaluating financial companies; however, asset-based evaluation metrics are generally superior to earning-based metrics in evaluating such companies for the following reason:

Many financial companies have extensive investment portfolios which only record earnings gains on dividends, interest payments or capital gains if a security is sold. Therefore, the value of the these investment portfolios, particularly the unleveraged portions of the investments, is not reflected by the earnings power of the business. For my purposes, the unleveraged portion is defined as total invested assets less the float (prepaid premiu! ms and ot! her money held in investment accounts that does not belong to the company).

Allow me to illustrate the point since I am sure that many readers are confused by the previous paragraph. Let's compare two mythical insurance companies. Assume that both companies have earned $1 in investment earnings for the last five years. Suppose Company A has $50 million in equity on their balance sheet whereas Company B has equity of $100 million.

Let's further assume that both companies possess equal float which is invested in government agencies and treasuries which supply exactly the same interest yield for the two stocks. However, Company B is also an unleveraged equity portfolio which is valued at $50 million. For the sake of simplicity, say it contains stocks that pay no dividends. Company A has no unleveraged capital to utilize for investment purposes; it merely invests the amount of its float in fixed-income investments.

According to an earnings-based metric such as a price to earnings ratio, the companies are equivalent in value in terms of investment earnings (of course their operating earnings are a different matter). However, what if Company B decides to sell its equity holdings tomorrow and distribute the after-tax proceeds to its shareholders in the form of a special dividend? In such cases, the intrinsic value of Company B is much better reflected by its price to book ratio rather than its price to earnings ratio.

To reiterate, price to book ratios offer a better measurement of the value of a company's investment holdings, particularly the unleveraged portion of a financial company's investments. Thus, investors are generally better served by estimating a financial company's intrinsic value by using asset-based metrics rather than earnings-based metrics.

Gains in Equity per Share as the Key Metric in Financial Stocks and Holding Companies

I will now return to our previous discussion involving Company B and its unleveraged equity portfolio. As we discussed! earlier,! Company B is definitely cheaper than Company A in terms of its price to book ratio. But is it necessarily a better investment merely because it is cheaper? The answer lies in evaluating the long-term CAGR of the book value per share of Company B vs. Company A.

Let's journey back ten years and examine the two companies. Ten years ago, Company A had $20 million in equity and Company B had had $40 million, so both companies have grown their equity by 150 percent. Therefore, are they roughly equivalent? Hardly. Further examination reveals that Company B had $40 million shares outstanding ten years ago. Now they have 100 million shares outstanding. The extra shares were created by a secondary offering and stock options which were granted to management.

On the other hand, Company A still has the same amount of shares outstanding as they did ten years ago — 20 million. So the book value per share of Company A has increased from $1 per share to $2.50 per share in the past ten years. For Company B, the book value per share has remained at a $1 per share, although their equity has risen 150 percent. Furthermore, the equity portfolio still has the same market value as it did ten years prior. Additionally, the combined ratio for Company B is inferior to that of Company A, indicating the company writes inferior business. All these factors have played a part in the divergence of the growth of equity per share between the two companies.

In this illustration, the management of Company A has clearly performed in a superior manner when compared to the management of Company B. Their superiority is reflected in the equity growth per share in the business. It would seem that the discount to book that the market is offering on Company B is really no bargain after all.

Gains in equity per share reflect the effectiveness of management decisions in terms of capital allocation as well as revealing the operating efficiencies of a business. For instance, if stock options are issued and exercise! d they sh! ow up in the figure. The same is true for all stock buy-backs and secondary offerings as well as increases or decreases in the retained earnings of a company.

So long as the management exercises veracity in their accounting practices, evaluating the CAGR of equity per share is an excellent measurement of business efficiency and the effectiveness of management.

Calculating CAGR

As promised earlier, I will now unveil the mathematical formula used to calculate the compound annual growth rate (CAGR). The following example calculates the CAGR of the S&P 500 from 1986 through 2005, brought to you courtesy of allfinancialmatters.com.

CAGR = [(Ending Value ÷ Beginning Value)1/n] – 1

Where "n" is the number of time periods (20 years for this example)

Substituting the numbers from the example, the equation looks like this:

CAGR = [($95,421.19 ÷ $10,000)1/20] – 1

CAGR = [9.542119.05] – 1

CAGR = 1.119392 – 1

CAGR = .119392 or 11.94%

[ Enlarge Image ]

Finding CAGR of Book Value and Tangible Book Value per Share on GuruFocus

GuruFocus provides CAGR per share in its 10-year financial section. Just go to the 10-year financials section and click on book value per share and you will be transported to a page that shows the following information:

Everest Re Ltd Annual Data

	Dec02	Dec03	Dec04	Dec05	Dec06	Dec07	Dec08	Dec09	Dec10	Dec11
Total Equity	2,368.6	3,164.9	3,712.5	4,139.7	5,107.7	5,684.8	4,960.4	6,101.7	6,283.5	6,071.4
Preferred Stock	--	--	--	--	--	--	--	--	--	--
Total Shares Outstanding	50.9	55.7	56.1	61.9	65.0	62.9	61.4	60.4	55.0	53.7
Book Value per Share	46.5	56.9	66.2	66.9	78.6	90.4	80.8	101.1	114.3	113.0

The yearly price to book value range for a stock can also be accessed in the 10-year financials section. The price of the stock appears directly under Book Value Per Share listed as Month End Stock Price. One can easily calculate the average price to 10-year book ratio of a stock by performing the simple mathematics.

A Formula for Success in Purchasing Financials and Holding Companies

Our goal is to purchase outstanding companies at discounted prices based on their 10-year CAGR of book value per share and their 10-year average price to book multiple. It is imperative that we add back dividends into the formula since they represent equity which was distributed to shareholders.

We are looking for financial stocks or holding companies which have grown the highest CAGR of BV per share, including dividends, trading at a minimum of a 25% discount to their 10-year average price to book multiple.

Thus our revised formula for CAGR of BV now reads as follows:

CAGR of BV per share = [(Ending Value + dividends ÷ Beginning Value)1/n] – 1

Where

CAGR of BV per share is > 15%

And

The stock price is< .75 its 10-year average price to book ratio

If investors prefer to eliminate intangibles from the equation they should feel free to do so. I have decided to include goodwill and other intangible assets in my price to book ratios due to accounting changes enacted in 200! 2.
Goodwill is now impaired rather than amortized; therefore, theoretically, it will disappear from the balance sheet if it contains no real economic value. That said, I fully understand the subjective nature of goodwill impairments. Fortunately, many financial stocks show little in the way of goodwill and other intangible assets on their balance sheets, unless they engage in serial acquisitions. In the case of holding companies that is another story.

RE a Perfect Example of Value Uncovered by the Formula

Last August, I purchased Everest Re (RE) when it fell within the value parameters outlined in today's article. I wrote an article about the stock titled: Everest Re: Low Risk High Reward http://www.gurufocus.com/news/143388/everest-re-low-risk-high-reward

At that time RE had generated 10-year CAGR of BV per share with dividends included was 26.8%. The stock qualified under the investing sabermetric since it was trading at approximately .7x its book value in August with a 10-year average price to book value of 1.115; therefore it was trading at approximately 63% of its mean price to book ratio.

Currently RE has reached a 52-week high and is trading at about .89x book value. It would qualify as a buy under the investing sabermetric if the price the price dropped below $89 per share using the latest financials to determine its current book value per share.

Summary

1) Warren Buffett uses CAGR of book value to track the progress of Berkshire Hathaway and his management efficiency.

2) A similar method which tracks CAGR of book value plus dividends can be use to identify high quality financial stocks and holding companies.

3) It is imperative that investors purchase these high quality companies at favorable prices; I suggest buying the companies at less than 75% of their ten-year average price to book ratio.

4) The formula is as follows:

CAGR of BV per share = [(Ending Value + dividends ÷ Beginning Value)1/n] – 1

Wher! e

! CAGR of BV per share is > 15%

And

The stock price is < .75 its 10-year average price to book ratio

5) The formula is best suited in evaluating financial stocks and holding companies.

Annaly Capital Management's Bloodless Coup

I've been meaning to write about this for some time, but have put it off because, frankly, I feel slightly sullied every time I write about Annaly Capital Management (NYSE: NLY  ) . Of all the companies that I follow, I believe it to be the least honest and forthcoming with shareholders. And lest there be any doubt about this, its decision to "externalize" its management team, taken at last month's annual shareholder meeting, confirms this opinion.

For those of you that haven't followed this story, let me give you a brief recap. At the beginning of April, Annaly's executives asked investors to vote in favor of a "management externalization proposal," under which the job of managing the mortgage REIT would pass to a newly created entity known as Annaly Management Company.

Because the new entity would be wholly owned and staffed by Annaly's current executives, the proposed structure appeared on its face to be more clerical than anything else. That is, the individuals responsible for running the company wouldn't change; they'll just no longer be employed by Annaly directly, but rather by the independent management company. Thus, as opposed to paying executive salaries directly, Annaly would simply pay the management company the equivalent of 1.05% of its consolidated stockholders' equity.

Why would Annaly do this? The purported rationale is that the new structure will save approximately $210.9 million over the next five years. And it's for this reason analysts have spoken favorably, albeit naively, about the proposal, which is set to take effect in July.

At this point, you're probably wondering what in the world could be wrong with this. Aren't lower expenses a good thing? Yes. Of course they are. But there's more to this story than meets the eye.

It's my opinion that any expense reductions -- which, for reasons I won't get into here, I believe to be suspect on their face -- have nothing to do with this proposal. The real reason Annaly's executives want to separate the management team is because it will allow the company (and thus the people that run it) to sidestep a number of disclosure requirements mandated by federal securities laws.

The starting point to understand this is the fact that Annaly pays its executives well -- very well. In 2012, its now-former CEO Michael Farrell took home $32 million, and current CEO Wellington Denahan took home $25.8 million. In 2011, each cleared $35 million.

How do we know this? We know this because under the Securities Exchange Act of 1934, a company is obligated to disclose the salaries of its highest-paid executives.

Now, admittedly, this wouldn't typically be a problem. A company can and should be allowed to pay its executives what its board of directors (which purportedly represents shareholders) determines to be appropriate.

But there's a catch.

Following the wave of corporate fraud that led to the downfall of Enron and Worldcom, among others, the Sarbanes-Oxley Act began requiring companies to hold so-called "say-on-pay" votes every one to three years. The point was to give shareholders a nonbinding vote on whether or not they agreed with executive compensation levels. The frequency of the votes, moreover, would be decided in a separate nonbinding vote.

To get back to Annaly, at its 2011 annual meeting, the company's shareholders voted overwhelmingly in favor of holding annual say-on-pay votes. But in direct contradiction of this, Annaly's board, which is chaired by its CEO, voted instead to hold the votes every three years. (As a side note, its shareholders also voted against reelecting two board members, who were subsequently reappointed by the company anyway.)

Why would Annaly contradict the expressed desire of its stockholders? While it's impossible to read their minds, the results of this year's say-on-pay vote offers a hint: 113 million shares voted in favor of 2012 executive compensation levels while 289 million voted against them. Thus, a full 72% of the votes cast objected to how much its executives earn.

So, what's this have to do with the management externalization proposal? Under the new structure, Annaly will no longer be obligated to disclose how much its executives get paid, as that will be the responsibility of the management company, which, in turn, is privately owned and under no obligation to do so.

Even though I've written about Annaly a lot over the last two years, I still continue to be surprised by its executives' efforts to usurp a larger piece of the corporate pie than they would otherwise be entitled to if they took their fiduciary duties and disclosure responsibilities seriously. To anyone that holds this stock, I encourage you to think long and hard about continuing to do so. And for those of you considering an investment in Annaly, take this as a warning. You may make money from this investment (or you may not), but it won't be because of its executives, rather it will be in spite of them.

To learn more about Annaly and the problems I've identified in the past, check out the articles below:

6 Reasons to Fear Annaly and Chimera How Annaly's Executives Fleece Shareholders Annaly Has a Credibility Problem How Annaly Is Obfuscating Facts to the Detriment of Shareholders 2 Lessons Annaly Can Learn from the NBA Scandal Why Annaly's Deal Should Scare Shareholders

There's no question Annaly Capital's double-digit dividend is eye-catching. But can investors count on that payout sticking around? With the Federal Reserve keeping interest rates at historically low levels, Annaly has had to scramble to defend its bottom line. In The Motley Fool's premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!

#pitch{ margin-bottom: 15px; }

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Focus Shifting in UAE Lending Market

Best Investments For 2014

Banks in the UAE are warning companies that their quest for lower borrowing costs is the main reason why lending looks less and less appealing, writes Gregor Stuart Hunter of The National.

Tirad Mahmoud, the chief executive of Abu Dhabi Islamic Bank (ADIB), has warned of "irrational exuberance" in the UAE's corporate lending market, saying companies are seeking to lower borrowing costs by so much that banks may no longer find it appealing to lend.

Mr. Mahmoud said ADIB was finding fewer opportunities in corporate lending and is instead seeking to build out its retail banking franchise with a focus on expatriates in the UAE.

"There's irrational exuberance in terms of margin compression. It's moving too fast," he told reporters attending a Ramadan event on Sunday night. "What we see is making lending less interesting for us and therefore our engagement in that area will gradually tail off."

Dubai's government-backed corporations including Emaar Properties, Dubai Duty Free, Nakheel, and Jebel Ali Free Zone (Jafza) have said they have sought or obtained lower borrowing costs on about US$5 billion of outstanding bank debts within the past few months.

Mr. Mahmoud attributed the trend to credit-ratings upgrades for certain companies and the willingness of some banks to accept lower margins as they compete harder for new business.

Jafza was upgraded by Moody's Investors Service to Ba3 in June, while Standard & Poor's raised Emaar Properties to BB+ in April.

Last month, Emaar was said to have requested that banks cut the margin it pays on Dh3.6bn in loans from 350 basis points to 175 basis points above Libor.

Banks have competed hard for loans in the meantime, with regional banks, including Qatar National Bank and Doha Bank earmarking billions of dollars for their UAE operations this year.

Banks in the Emirates grew their loan books by Dh32bn to Dh1.1 trillion in the first five months of the year, a greater increase in net lending than the total of Dh28.1bn in new credit during all of 2012, according to the latest data from the Central Bank.

Some banks have been more reluctant to lend, with HSBC showing no change in total lending during the year so far, as it reported quarterly profits on August 5.

Mr. Mahmoud is a rare voice urging caution over the UAE economy, where a surge in tourist arrivals and Dubai property prices have helped to propel local bourses to some of the highest year-to-date gains worldwide.

Bank shares have hit all-time highs in anticipation of a flood of institutional capital brought by the UAE's upgrade to emerging market status by MSCI in June.

Dubai's five-year credit default swaps, which insure the emirate's government debts against missed payments, have fallen 96 basis points during the past year.

The reference to "irrational exuberance" echoes a warning by the former United States Federal Reserve chairman Alan Greenspan in a speech in 1996, in which he discussed central banks' difficulty in identifying asset bubbles before they burst.

The phrase gained notoriety after US equity markets plummeted, following the dotcom crash, then once again at the onset of the global financial crisis in 2008.

Read more from The National here…

Microsoft Introduces New Kinect for Windows

After introducing an enhanced Kinect senor for its new Xbox One just a few days ago, Microsoft (NASDAQ: MSFT  ) said today that a new generation of Kinect is coming to Windows computers. Bob Heddle, Director of Kinect for Windows, said in a blog post that, "A new Kinect for Windows era is coming: an era of unprecedented responsiveness and precision."

The company said that the Kinect for Windows technology is designed for businesses and organizations. Some of the new features include:

Higher fidelity: The new Kinect for Windows sports a new HD video camera, and a microphone that picks up voice commands while in crowded rooms. The Kinect also has a new enhanced motion sensor that, "recognizes precise motions and details, such as slight wrist rotation, body position, and even the wrinkles in your clothes," according to Microsoft.
  Expanded field of view: The company said the new Kinect sensors can recognize many different-sized rooms making it easier for business to integrate the technology for clicker-free presentations and training sessions.

Improved tracking: The new Kinect sensor can pick up more body recognition points, allowing for more accurate tracking of body movements. The sensors can also track up to six people at a time. 

Improved infrared technology: Enhanced infrared technology now allows the Kinect to work in almost any lighting condition. 

The Kinect will officially launch at the BUILD 2013 conference next month. Pricing information hasn't been released yet.

Best High Tech Companies To Invest In Right Now

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, hazardous waste disposal specialist US Ecology (NASDAQ: ECOL  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at US Ecology and see what CAPS investors are saying about the stock right now.

US Ecology facts

Headquarters (founded)	Boise, Idaho (1952)
Market Cap	$501.8 million
Industry Best High Tech Companies To Invest In Right Now: Southern Copper Corporation(SCCO) Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile. It is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce anode copper; and refining of anode copper to produce copper cathodes, as well as refined silver. The company operates Toquepala and Cuajone mines in the Andes Mountains located southeast of the city of Lima, Peru, as well as a smelter and refinery in the coastal city of Ilo, Peru. It also operates La Caridad and Buenavista copper mines, and smelting and refining plants in Mexico. In addition, the company operates five underground mines that produce zinc, copper, lead, silver, and gold; a coal mine which produces coal and coke; and a zinc refinery. Further, it has 145,064 hectares of mineral rights in Peru; 176,250 hectares of exploration concessions in Mexico; 1,068 hectares of exploration concessions in Argentina; 35,958 hectares exploration concessions in Chile; and 2,544 hectares of exploration concessions in Ecuador. The company was founded in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation. Best High Tech Companies To Invest In Right Now: Great Basin Gold Com Npv (GBG.TO) Great Basin Gold Ltd., a mineral exploration and development company, engages in the acquisition, exploration, and development of precious metal deposits. The company has two primary projects, including the Hollister gold project comprising a total of 950 unpatented, federal mining claims, covering approximately 69 square kilometers located in Ivanhoe Mining District, Elko County, Nevada; and the Burnstone gold mine consisting of mineral rights covering approximately 35,000 hectares situated in the Witwatersrand Basin goldfields in South Africa. It also owns mineral properties in Tanzania and Mozambique. Great Basin Gold Ltd. was founded in 1986 and is headquartered in Sandton, South Africa. 5 Best Safest Stocks To Own Right Now: Pizza Inn Inc.(PZZI) Pizza Inn, Inc., together with its subsidiaries, operates and franchises pizza buffet, delivery/carry-out, and express restaurants in the United States and internationally. Its buffet restaurants offer dine-in, carryout, and catering services, as well as delivery services. The company?s delivery/carryout restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its express restaurants serve its customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, athletic facilities, or other commercial facilities. The company operates restaurants under Pizza Inn trademark. As of July 1, 2011, it owned and operated 5 restaurants; and franchised approximately 300 restaurants. Pizza Inn, Inc. was founded in 1958 and is based in The Colony, Texas. Monday, August 5, 2013 3 Stocks Under $10 Triggering Breakout Trades  DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers. Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade. Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success. With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today. Pacific Drilling Pacific Drilling (PACD) is an international offshore drilling contractor committed to becoming the preferred provider of ultra-deepwater drilling services to the oil and natural gas industry through the use of high-specification rigs. This stock closed up 1% to $9.94 in Thursday's trading session. Thursday's Range: $9.87-$10.00 52-Week Range: $8.63-$10.99 Thursday's Volume: 450,000 Three-Month Average Volume: 308,772 From a technical perspective, PACD bounced modestly higher here right above its 50-day moving average of $9.67 with above-average volume. This stock has been trending sideways and consolidating for the last five months, with shares moving between $8.89 on the downside and $10.23 on the upside. Shares of PACD are now starting to trend within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if PACD manages to take out some key overhead resistance levels at $10.14 to $10.23 with high volume. Traders should now look for long-biased trades in PACD as long as it's trending above its 50-day at $9.81 and then once it sustains a move or close above those breakout levels with volume that hits near or above 308,772 shares. If that breakout triggers soon, then PACD will set up to re-test or possibly take out its next major overhead resistance levels at $10.71 to its 52-week high at $10.99. Any high-volume move above $10.99 will then put its all-time high at $11.47 within range for shares of PACD. Zale Zale (ZLC) is a specialty retailer of fine jewelry in North America. This stock closed up 2.5% to $9.52 in Thursday's trading session. Thursday's Range: $9.29-$9.56 52-Week Range: $2.94-$9.85 Thursday's Volume: 567,000 Three-Month Average Volume: 951,295 From a technical perspective, ZLC bounced modestly higher here right above its 50-day moving average of $8.70 with lighter-than-average volume. This stock has been consolidating and trending sideways over the last month, with shares moving between $8.44 on the downside and $9.70 on the upside. This spike today is now starting to push ZLC within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if ZLC manages to take out some near-term overhead resistance levels at $9.70 to its 52-week high at $9.85 with high volume. Traders should now look for long-biased trades in ZLC as long as it's trending above its 50-day at $8.70 or above more support at $8.44 and then once it sustains a move or close above those breakout levels with volume that hits near or above 951,295 shares. If that breakout triggers soon, then ZLC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $12 to $14. Office Depot Office Depot (ODP) is a global supplier of office products and services under the Office Depot brand and other proprietary brand names. This stock closed up 1.8% to $4.41 in Thursday's trading session. Thursday's Range: $4.34-$4.43 52-Week Range: $1.51-$6.10 Thursday's Volume: 7.76 million Three-Month Average Volume: 6.66 million From a technical perspective, ODP trended up modestly here right above its 50-day moving average of $4.24 with above-average volume. This move is quickly pushing shares of ODP within range of triggering a major breakout trade. That trade will hit if ODP manages to take out some near-term overhead resistance levels at $4.49 to $4.51 with high volume. Traders should now look for long-biased trades in ODP as long as it's trending above its 50-day at $4.24 or above more key support at $4.08 and then once it sustains a move or close above those breakout levels with volume that hits near or above 6.66 million shares. If that breakout triggers soon, then ODP will set up to re-test or possibly take out its next major overhead resistance levels at $5.60 to its 52-week high at $6.10. Any high-volume move above $6.10 will then put $6.50 to $7 within range for shares of ODP. To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr. -- Written by Roberto Pedone in Delafield, Wis. Sunday, August 4, 2013 KEYW Holding Goes Red KEYW Holding (Nasdaq: KEYW  ) reported earnings on April 30. Here are the numbers you need to know. The 10-second takeaway For the quarter ended March 31 (Q1), KEYW Holding beat expectations on revenues and missed expectations on earnings per share. Compared to the prior-year quarter, revenue grew significantly. GAAP earnings per share shrank to a loss. Margins shrank across the board. Revenue details KEYW Holding booked revenue of $77.9 million. The seven analysts polled by S&P Capital IQ predicted a top line of $75.2 million on the same basis. GAAP reported sales were 40% higher than the prior-year quarter's $55.8 million. Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates. EPS details EPS came in at -$0.06. The seven earnings estimates compiled by S&P Capital IQ anticipated -$0.03 per share. GAAP EPS were -$0.06 for Q1 compared to $0.01 per share for the prior-year quarter. Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates. Margin details For the quarter, gross margin was 30.9%, 300 basis points worse than the prior-year quarter. Operating margin was -4.0%, 520 basis points worse than the prior-year quarter. Net margin was -2.9%, 320 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.) Looking ahead Next quarter's average estimate for revenue is $81.8 million. On the bottom line, the average EPS estimate is -$0.04. Next year's average estimate for revenue is $330.0 million. The average EPS estimate is -$0.02. Investor sentiment The stock has a five-star rating (out of five) at Motley Fool CAPS, with 25 members out of 26 rating the stock outperform, and one members rating it underperform. Among five CAPS All-Star picks (recommendations by the highest-ranked CAPS members), five give KEYW Holding a green thumbs-up, and give it a red thumbs-down. Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on KEYW Holding is buy, with an average price target of $17.71. Looking for alternatives to KEYW Holding? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report. Add KEYW Holding to My Watchlist. Saturday, August 3, 2013 Top 5 Oil Stocks To Invest In 2014 Sometimes I wish I had been born into a simpler time when foods that were good and bad were pretty much laid out in black and white. You were supposed to drink your milk, eat your vegetables, and avoid eating excessive amounts of chocolate if you wanted to grow up to be healthy. Nowadays, even the foods that have long since been touted as healthy for you are no longer construed as such. If you don't believe me, just look at how many times that researchers have flip-flopped their view on the risks versus benefits of eggs. As comedian Lewis Black put it in 2000, "They said they're good, they're bad, they're good, the whites are good, the yolks are bad.... Make up your mind! It's breakfast; I've gotta eat!" For those of you men who adhere to strictly healthier foods, or use various dietary supplements to improve your health, you may have had your bubble burst yet again in a study published online Wednesday by The Journal of the National Cancer Institute with regard to the effects of fish oil on the body over the long term. Top 5 Oil Stocks To Invest In 2014: Exxon Mobil Corporation(XOM) Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. The company manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and other specialty products. As of December 31, 2010, it operated 35,691 gross and 30,494 net operated wells. The company has operations in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. Exxon Mobil Corporation was founded in 1870 and is based in Irving, Texas. Advisors' Opinion: [By Daniel Dicker] Of the biggest four or five multinational integrated oil companies, my favorite remains Exxon Mobil(XOM). The company's dominance will pay off if natural gas finally finds a floor and Exxon's stock buybacks and steady dividend make it the oil stock for pure buy-and-holders. [By Stephen Faulkner] What keeps running around the headlines? What do you see when you fill up your tank 1, 2, 3 times a week? That would be rising fuel prices. As fuel prices go up, typically the companies which are in the business of selling that fuel, go up. Exxon Mobil is huge, running a $406.9 billion market cap. Solid earnings and low debt relative to income add to the attractive qualities of this stock. The days of "cheap gas" are behind us, and Exxon Mobil stands to appreciate as demand outstrips supply. Exxon Mobil has been trading around $85 for most of 2012 and currently sits at $86.33. As gas prices increase I expect share price to appreciate and head towards $100 per share, representing a 16% upside. Dividend payment is currently $0.47 per share, paid quarterly. Top 5 Oil Stocks To Invest In 2014: HRT Participacoes em Petroleo SA (HRTPY) HRT Participacoes em Petroleo SA, formerly BN 16 Participacoes Ltda, is a Brazil-based holding company engaged in the oil and gas industry. The Company is primarily involved in the exploration and production (E&P) of oil and natural gas in Brazil and Namibia. Through its subsidiaries, it is active in the geophysical and geological research, exploration, development, production, import, export and sale of oil and natural gas, as well as in the provision of air logistics services in transporting people and equipment related to oil and gas activities in the exploratory campaign in the Solimoes Basin. As of December 31, 2011, the Company had seven subsidiaries, including Integrated Petroleum Expertise Company Servicos em Petroleo Ltda (IPEX), HRT O&G Exploracao e Producao de Petroleo Ltda, HRT Netherlands BV, HRT America Inc, HRT Africa, HRT Canada Inc and Air Amazonia Servicos Aereos Ltda. Hot Canadian Companies To Buy For 2014: Energy XXI(Bermuda) Energy XXI (Bermuda) Limited, together with its subsidiaries, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. The company operates or has interest in 419 gross producing wells in 41 producing fields on 254,891 net developed acres. As of June 30, 2011, its net proved reserves were 116.6 million barrels of oil equivalent. The company was founded in 2005 and is based in Hamilton, Bermuda. Top 5 Oil Stocks To Invest In 2014: ConocoPhillips(COP) ConocoPhillips operates as an integrated energy company worldwide. The company?s Exploration and Production (E&P) segment explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. Its Midstream segment gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad. The company?s Refining and Marketing (R&M) segment purchases, refines, markets, and transports crude oil and petroleum products, such as gasolines, distillates, and aviation fuels. Its Chemicals segment manufactures and markets petrochemicals and plastics. This segment offers olefins and polyolefins, including ethylene, propylene, and other olefin products; aromatics products, such as benzene, styrene, paraxylene, and cyclohexane, as well as polystyrene and styrene-butadiene copolymers; and various specialty chemical products comprising organosulfur chemicals, solvents, catalyst s, drilling chemicals, mining chemicals, and engineering plastics and compounds. The company?s Emerging Businesses segment develops new technologies and businesses. It focuses on power generation; and technologies related to conventional and nonconventional hydrocarbon recovery, refining, alternative energy, biofuels, and the environment. This segment also offers E-Gas, a gasification technology producing high-value synthetic gas. ConocoPhillips was founded in 1917 and is based in Houston, Texas. Advisors' Opinion: [By Dave Friedman] Institutional investors bought 49,282,090 shares and sold 75,744,640 shares, for a net of -26,462,550 shares. This net represents 1.79% of common shares outstanding. The number of shares outstanding is 1,479,330,000. The shares recently traded at $65.51 and the company’s market capitalization is $89,946,840,000.00. About the company: ConocoPhillips is an international, integrated energy company which operates in several business segments. The Company explores for and produces petroleum, and refines, markets, supplies, and transports petroleum. ConocoPhillips also gathers and processes natural gas, and produces and distributes chemicals and plastics. Top 5 Oil Stocks To Invest In 2014: Carnival Corporation(CCL) Carnival Corporation operates as a cruise and vacation company. It provides cruises to various vacation destinations with a portfolio of cruise brands comprising Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn in North America; and AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, and P&O Cruises in Europe, Australia, and Asia. The company also involves in operation of hotels, as well as offers tour and transportation services. It operates approximately 98 ships, as well as owns and operates 15 hotels or lodges that include 3,420 guest rooms; 395 motorcoaches; and 20 domed rail cars. The company sells its cruises through travel agents, including wholesalers and tour operators. Carnival Corporation was founded in 1974 and is headquartered in Miami, Florida. Advisors' Opinion: [By Hawkinvest] Carnival Corporation (CCL) is a leading cruise line company, operating under various brands which include: Carnival Cruise Lines, Seabourn, Holland America Line, Princess Cruises, Cunard, AIDA, Ibero Cruises, P&O Cruises and Costa Cruises. Carnival is currently facing a number of issues which include the recent capsizing of the Costa Concordia cruise liner off the coast of Italy. That cruise line disaster has resulted in extra expenses, and the company recently warned that it saw reduced bookings. It also said it could not estimate the full impact of the loss at this time. Carnival has significant exposure to the economy in Europe, and that could be a further drag on results. European consumers might cut back on vacation spending over economic concerns and high prices at the pump. In addition, fuel is a major expense for this company, and rising oil prices could hurt financial results for Carnival in the coming months. The stock might drop further as these headwinds continue over the coming months. Here are some key points for CCL: Current share price: $30.74 The 52 week range is $28.52 to $44.11 Earnings estimates for 2012: $2.18 per share Earnings estimates for 2013: $2.62 per share Annual dividend: $1 per share which yields about 3.2% Thursday, August 1, 2013 Today's 3 Best Stocks Not to sound like a broken record or anything, but the broad-based S&P 500 (SNPINDEX: ^GSPC  ) hit its fourth consecutive all-time record high. Like yesterday, economic data had very little to do with the move so much as it improved earnings across a wide swath of industries. In fact, as you'll see below, today's three top performers all rallied because of their earnings results. Tomorrow's Mortgage Brokers Association Index and Thursday's initial jobless claims could be the big S&P 500 catalysts over the coming days, but earnings remain the driver in the meantime. For the day, the S&P 500 finished higher by 8.46 points (0.52%) to close at 1,625.96. Leading the S&P 500 higher was fashion accessories maker Fossil (NASDAQ: FOSL  ) , which blew past the Street's estimates in the first-quarter and gained 9% on the day. For the quarter, revenue rose 15% to $680.9 million as adjusted EPS gained 16% to $1.08. Results were driven by double-digit watch growth, a 22% rise in direct-to-consumer sales, and a nice reversal in Europe, where its wholesale business grew 14%. Furthermore, Fossil raised its full-year EPS forecast for the year to a range of $6-$6.26 from its previous outlook of $5.85-$6.15. While I've long been a fan of Fossil, this report could also foretell that a big beat is coming for Michael Kors (NYSE: KORS  ) , with which Fossil has a watch manufacturing agreement. Top Insurance Stocks To Buy For 2014 Oil and natural gas driller EOG Resources (NYSE: EOG  ) had an incredibly strong day, gaining 7.7% following an estimate-crushing first-quarter report. Revenue for the quarter jumped 20% to $3.36 billion as profits soared 53% to $1.82 per share as it increased its oil production by a third. EOG attributed its success to new refinement techniques in completing wells in the Eagle Ford shale region, which should allow the company to expand faster than its rivals. Comparatively, Wall Street had expected just $3.12 billion in revenue and $1.17 in EPS. Led by a truly incredible CEO in Mark Papa, there's no reason why EOG can't head even higher. Finally, satellite TV provider DIRECTV (NASDAQ: DTV  ) tacked on 6.9% after its first-quarter results also easily topped estimates. Thanks to $1.38 billion in share repurchases as well as the addition of 604,000 net subscribers, DIRECTV reported a nearly 8% increase in revenue to $7.58 billion as EPS increased to $1.43. Analysts, on the other hand, had expected $7.53 billion in revenue but just $1.10 in EPS. The key for DIRECTV is in the differentiation from DISH Networks, which is allowing consumers more choices and helping to increase average revenue per user in a very challenging economic environment. Still priced very reasonably, DIRECTV's run higher may not be over. Can this hot retailer head even higher? Michael Kors is one of today's hottest high-end fashion brands, and that's translated into one of the best-performing stocks in retail -- since its debut on the market in late 2011, the share price has more than doubled. But with all that growth, has the stock finally become too expensive or is there still room left to run? The Motley Fool's premium report on Michael Kors gives investors all the information they need to make the right decision. We cover the key must-watch areas, opportunities, and threats to the company that investors need to know. To claim your copy, simply click here now for instant access. #pitch{ display: none; } More Expert Advice from The Motley Fool The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company. Subscribe to: Posts (Atom) Blog Archive ►  2019 (33) ►  April (1) ►  March (16) ►  February (16) ►  2018 (18) ►  August (2) ►  July (8) ►  June (2) ►  May (6) ►  2016 (2) ►  December (1) ►  November (1) ►  2015 (125) ►  July (8) ►  June (16) ►  May (19) ►  April (16) ►  March (22) ►  February (19) ►  January (25) ►  2014 (327) ►  December (20) ►  November (21) ►  October (35) ►  September (35) ►  August (33) ►  July (42) ►  June (35) ►  May (27) ►  April (27) ►  March (22) ►  February (14) ►  January (16) ▼  2013 (115) ►  December (20) ►  November (20) ►  October (25) ►  September (15) ▼  August (18) Seth Klarman’s Investment Framework 10 Best Gold Stocks To Own For 2014 Darden: A Step Ahead in Latin America - Analyst Blog ICE Clears SEC Regulatory Approval for NYSE Eurone... Top Portfolio Products: Schwab Lowers Expense Rati... SIFMA Pushes for Higher Muni Trading Standard Southwest Gains Traffic in June - Analyst Blog Daily ETF Roundup: Stocks Finish Flat, XLK Tumbles... Gold outlook for short-term: thegoldforecast.com Investing Sabermetrics: A Formula for Financials a... Annaly Capital Management's Bloodless Coup Focus Shifting in UAE Lending Market Microsoft Introduces New Kinect for Windows Best High Tech Companies To Invest In Right Now 3 Stocks Under $10 Triggering Breakout Trades KEYW Holding Goes Red Top 5 Oil Stocks To Invest In 2014 Today's 3 Best Stocks ►  July (17) About Me Unknown View my complete profile Watermark theme. Powered by Blogger.